Got Stock? Employers Take Note – Future Employees Want Their Share

New research from Fidelity shows that over 80 percent of employees say that a company stock plan influences their decision to change employers

BOSTON, July 2, 2014 – An increasing number of workers are considering the availability of a company stock plan when evaluating a new job opportunity, according to new research1 conducted by Fidelity Investments. When asked about the importance of company stock plans as part of their compensation and benefits package, 86 percent of respondents under the age of 40 said they would want their new employer to offer a company stock plan if they changed jobs. In addition, 40 percent of overall respondents consider a company stock plan as a “must have” when making a decision to change employers, and over a third of respondents (37 percent) indicated that giving up their company stock plan would make it harder for them to leave their current job.

A rebounding job market2 has intensified the competition for talented workers, and employee retention has emerged as one of the top corporate HR challenges for 20143. As a result, an increasing number of companies are utilizing stock plans4 to enhance their overall benefits package and attract and retain employees at all levels, from senior executives to recent college graduates. While Fidelity’s survey reflects the majority of employees still value “traditional” company benefits, nearly a third (29 percent) of employees consider a company stock plan as one of their most valued benefits. In fact, 10 percent of respondents ranked their company stock plan as their most valued benefit – ahead of a health care plan, 401(k) and all other employee benefits such as a dental plan and child care.

“In many competitive markets, employees are taking a broader look at the overall benefits offered by new employers,” said Kevin Barry, executive vice president, Stock Plan Services at Fidelity Investments. “The availability of a company stock plan can ‘tip the scale’ in a company’s favor when employees are evaluating job opportunities, especially in industries that demand highly skilled or specialized workers. Employers who recognize this fact will be at the forefront of the ‘war for talent’ and well positioned to attract and retain the best employees for their business needs.”

According to Fidelity’s study, company stock plans can help increase employee loyalty and worker productivity. Over half of employees surveyed (57 percent) indicate that equity compensation plans contribute to their feeling loyal to their employer, and 54 percent indicate their company stock plan “provides an incentive to work harder and be rewarded for the company’s performance.”

In addition, the study found employees in company stock plans are highly engaged in their companies’ performance with 89 percent of respondents knowing the current price of their company stock, and 85 percent knowing the overall value of their stock plan assets and their vesting schedule.

Company stock plans serve as a complement to workplace savings plans

Company stock plans are increasingly used as supplemental savings vehicles that can be easily accessed and used for non-retirement expenses, without any fees or IRS penalties.

As a result, company stock plays a growing role in meeting workers’ ongoing financial needs – over a third (34 percent) indicated they liquidated when their company stock hit a certain price, while 60 percent have sold company stock to generate funds.

“Today’s workers increasingly understand that a company stock plan is a great savings option to complement their traditional workplace savings plan,” said Barry. “Fidelity will continue to apply our financial expertise and innovative approach to provide the highest level5 of support helping them to maximize the benefits of their company stock plan.”

Fidelity is a leading provider of stock plan administration services in the United States. As of May 31, 2014, Fidelity services 1.4 million employers nationwide, representing $180 billion in grant value.

About Fidelity Investments

As of May 31, 2014, the company held assets under administration of $4.8 trillion, including managed assets of $2.0 trillion; it is one of the largest mutual fund companies in the U.S. and the No. 1 provider of both workplace savings plans and Individual Retirement Accounts (IRAs). For more information about Fidelity Investments, visit www.fidelity.com.

1) Survey of 2,116 stock plan participants, both US (total: 1,475) and international (total: 641), with 592 respondents under the age of 40. Survey data was collected between January 29, 2014 and March 10, 2014 by Market Probe.

3) 2014 Predictions: Building a Strong Talent Pipeline for The Global Economic Recovery, Josh Bersin, Principal and Founder, Deloitte Consulting LLP, December 2013. Available to research members at www.bersin.com/library.

4) Study conducted by Richard Day Research/Market Probe of Chicago online between December 18 and 28, 2012. Respondents were decision makers regarding the administration of at least one of these plan types: restricted stock, stock option plans and employee stock purchase plans.

5) Fidelity Investments received the highest ratings for overall customer satisfaction with its stock plan administration services in an annual survey of corporate stock plan sponsors by Group Five, Inc., a corporate services research and consulting firm in Fairax, CA. The 2013 Group Five survey examined 836 corporate stock plan sponsors with 2,497 stock plans such as stock options, restricted stock, stock purchase, performance shares and stock appreciation rights. The study was conducted from May 15 to July 12, 2013.